Monetary Policy after the Great Recession: The Role of Interest Rates

Walter Bagehot noticed once that “John Bull can stand many things, but he cannot stand two per cent.” Well, for several years, he has had to stand interest rates well below that, in some countries even below zero. However, despite this sacrifice, the economic recovery from the Great Recession has been disappointingly weak. This book’s aim is to answer this question.

The central thesis of the book is that the standard understanding of the monetary transmission mechanism is flawed. That under...